Riding on optimism, promising the riches

Optimism seems to be the key sentiment driving the FY26 Union Budget.

- Rajiv Kumar

This is reflected in the finance minister's (FM) assumption of 10.1% nominal gross domestic product (GDP) growth rate for the coming fiscal against the ministry of statistics and programme implementation (MOSPI)'s advance estimate of 9.7%. Similar optimism is reflected in the hope that the high-level committee tasked with reducing the compliance, inspection and regulatory burden will suffice to perk up investors' confidence and the reduction in personal income tax rates, for the lower segments of the middle class will provide the much-needed boost to consumption demand.

Let's hope that this optimism is borne out as the year progresses, and economic growth remains resilient in the face of global headwinds that the Economic Survey saw as a major downside risk for the economy.

With total revenue receipts projected to increase by 9%—budget estimates (BE) FY26 over BE FY25—a pace lower than that of the nominal GDP growth, and the government's commendable commitment to maintaining the fiscal deficit target at 4.4%, it was incumbent for the FM to slow down the growth in public expenditure compared to previous years. Thus, total expenditure is slated to rise by only 5% in FY26 with public capex remaining virtually unchanged at ₹11.2 lakh crore compared to the budgeted ₹11.11 lakh crore in FY25. There are two inferences here.